HealthFirst debates cash-reserves goal in planning for new clinic

With HealthFirst Bluegrass under investigation by the Kentucky state auditor's office and undergoing layoffs and reorganization, members of the entity's board wrestled yet again on Thursday with whether an $11.7 million public health clinic can be built.

Since it was announced in 2010, the future of the project has teetered on the brink of dissolution repeatedly, most recently in May when the board gave itself a 30-day deadline to fix financial problems or pull the plug.

The most recent challenge is a cost-cutting reorganization announced Tuesday that includes reducing staff hours, laying off 21 people and hiring for nine new positions.

During a meeting of the building committee, board members Thursday debated for about an hour whether HealthFirst should establish a minimum available cash reserve that would have to be in place before construction on the clinic at 496 Southland Drive can begin. Construction on the clinic, funded by a federal grant, is scheduled to start in October.

Board members, some of whom have professional financial backgrounds, suggested numbers ranging from $700,000 to $1.2 million as the minimum HealthFirst should have in the bank before moving forward with the tax-funded clinic.

Building committee chairman Tom Burich said HealthFirst is projecting to have about $360,000 in cash reserves available by October. Executive Director William North said problems with Medicaid funding makes those predictions difficult to make. He said Medicaid owes HealthFirst $1.2 million.

Board chairman William Lester asked whether HealthFirst could secure a line of credit that could be used as a contingency fund.

Burich said he has approached Central Bank to reopen a previously closed $500,000 line of credit. However, he said, that is impossible at the moment — in part because "they don't believe our numbers" because of the ongoing state audit.

State Auditor Adam Edelen announced the audit in May, saying it would likely take 30 days. It is still underway, and North said Thursday he didn't know when it would be complete.

Burich pressed for setting a cash-reserves minimum as soon as possible, but North said if the board were to ask him now whether he could get a minimum of $700,000 in place by October, he would urge the board to stop the project.

In the end, the building committee asked North to come back in three weeks with "substantial, factual information" about the amount of reserves needed before moving forward.

HealthFirst Bluegrass is a non-profit operating a public health clinic serving mostly the poor and those without insurance. It is funded primarily with tax dollars.